Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
Quick links:
  • Home
  • The Actuary Issues
  • June 2018
06

Solvency II deterring long-term investments

Open-access content 26th June 2018

Almost half of European insurers think Solvency II has restricted their ability to make long-term investments, with many worried the regulation has negatively impacted their products.

2


That is according to a survey of 87 insurers across 17 EU markets, which finds that 48% have invested less in equities, long-term bonds and private placements because of Solvency II.

The findings also show that 58% of those providing long-term savings products with guarantees believe the regulation has been damaging to their offerings.

This has led to fears that insurers are coming under pressure to shift risk on to customers at a time when the EU has been looking to boost sustainable growth around Europe.

"The European Commission's 2020 review of Solvency II must address the regulation's overly conservative nature," said Andreas Brandstetter, president of Insurance Europe, which carried out the research.

"It treats insurers as if they were short-term traders when they are, in fact, mostly long-term investors."

Despite concerns about investments and products, it was found that three-quarters of insurers believe the regulation has improved risk management and governance practices.

Brandstetter said the industry supports Solvency II, and welcomed changes that regonise infrastructure as a separate asset class and remove barriers to standardised transparent securitisations.

However, he said the Solvency II risk margin should be reduced, and that it currently removes €200bn (£176bn) of capital from balance sheets that could instead be put to productive use.

He also called for a reduction in the calibration of long-term equity investments, which are currently based on trading risk and create a barrier to greater investment.

This comes after research by Willis Towers Watson (WLTW) found that the risk margin had become an increasingly material component of insurers' balance sheets.

The firm said this was encouraging insurers to offload risk using companies outside the EU, causing asset liability matching challenges, and growth in the longevity reinsurance market.

"We believe the high level of risk margin is resulting in higher premium rates and reduced competition, leading to worse value for consumers," WLTW director, Kamran Foroughi, commented.


Sign up to our free newsletter here and receive a weekly roundup of news concerning the actuarial profession

This article appeared in our June 2018 issue of The Actuary.
Click here to view this issue
Filed in:
06
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Actuarial Analyst - Lloyd's Pricing

London (Central)
£40000 - £60000 per annum + benefits
Reference
119072

Move from Reserving/Capital to Lloyd's Pricing? Get in touch...

London (Central)
£40000 - £55000 per annum + benefits
Reference
119071

Senior Validation Actuary - Lloyd's

London (Central)
£100000 - £140000 per annum + benefits
Reference
119070
See all jobs »
 
 
 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2020 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited, Level 5, 78 Chamber Street, London, E1 8BL. Tel: 020 7880 6200